Sector report: Four fund picks in the heavily-polarised strat bond space

STRAT BONDS

clock • 5 min read

If interest rates do rise, fund managers shifting duration positions in strategic bond funds could come up trumps, writes Morningstar OBSR investment research analyst Marianne Weller...

Following the US Federal Reserve's comment in May that bond purchases could slow down by the end of the year given the improving macroeconomic situation in the US, fixed income markets have seen considerable volatility over recent months. Government bonds were directly impacted, with yields rising. Bond markets across the fixed income spectrum experienced outflows. Between 22 May and 16 October, the 10-year UK treasury yield rose from 1.9% to 2.8%. Investment grade corporate bonds, which have longer duration profiles and relatively low yields, also performed poorly, especially in June. ...

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